Humphries Kirk, based on Church Road, Ashley Cross, can help with legal matters personal to you. Leigh Bartlett, Associate Solicitor specialises in commercial property and she offers some helpful tips and advice to consider when purchasing a business;

  1. Premises
    Commonly, a business will be run from a premises that is subject to a lease from a third party landlord. Therefore when taking over a new business you must also consider that the consent of the landlord is likely to be required. A landlord will wish to ensure that any new tenant has the ability to comply with the terms of the lease and can afford the rent. Trade, personal, bank and professional references are therefore likely to be requested.
  2. Repair obligations
    Careful consideration should be taken with regards to the state and condition of the premises and whether extensive repairs will be required to be carried out or contributed to during the term of the lease. It is always prudent to have a surveyor review the terms of the lease and inspect the premises to advise further.
  3. Other security?
    A tenant with no trading history is not an attractive option for a landlord. A landlord therefore may seek to agree to hold a rent deposit which is a sum of money held in a separate account and can be called upon by the landlord if a tenant defaults under the terms of the lease. A separate rent deposit deed is often used to set out the terms and conditions between the parties.
  4. Personal guarantees
    A landlord may also consider, in addition to or as an alternative to a rent deposit, requesting  an individual to stand as a guarantor under the terms of the lease.  This means that if the tenant cannot comply with the terms of the lease, the landlord has the option to seek recompense from the guarantor.
  5. Employees
    Any employees will automatically transfer on the sale/purchase of the business.  Therefore full enquiries need to be made of who is employed in the business and clarification of all of the terms and conditions of their employment, i.e. rates of pay, holiday entitlement, position/role, any other benefits.  An employee who has their employment contract terminated in connection with a sale/purchase of a business may potentially have a claim against either party for unfair dismissal.
  6. Transfer of a Going Concern (TOGC) and VAT
    It is important to establish at the outset whether or not VAT may be chargeable on the rent or on the purchase of a business premises. This may hinge on whether or not the transfer could be classed as a TOGC for VAT purposes.
  7. Do you need any other permissions/licences?
    Depending upon the type of business being purchased, you may require a premises licence or a transfer of the designated premises supervisor licence.  When dealing with food, the Local Authority need to be notified of your intention and inspections will be carried out accordingly.

An important point to note is that you can’t run a business without a premises and there is little point in having the premises if you haven’t agreed the purchase of the business.  Both  aspects should be dealt with together, therefore,  as to do one without the other could be very risky.

If you require further assistance in connection with the above matters, please contact Leigh Bartlett, Associate Solicitor, Humphries Kirk on 01202 715815 or email